AUDIT-OVERVIEW

Chapter I
Definition
‘An audit is a systematic process of
objectively obtaining and evaluating
evidence regarding assertions about
economic actions and events to ascertain
the degree of correspondence between
these assertions and established criteria
and communicating the results to
interested users.”
Definition
• Systematic Process
1

• Obtaining and evaluating evidence about assertions regarding

2 economic actions and events

• Conducted objectively
3

• Ascertain the degree of correspondence between assertions

4 and established criteria

• Communicate the results to various interested users

5
 Communicate
the results to
Establish the users
degree of
correspondence
Objectively
Obtains evidence

Following
Systematic
Process

Independent Established
Auditor Assertions Criteria
 Conflict of interest
between management Expertise
and users

Need for
Audit

Financial
Remoteness
Consequences
Financial Compliance Operational
Audit Audit Audit
Organization has Org activities are
FS are fairly presented complied with conducted effectively
regulations and efficiently

Laws, regulations, and

PFRS Set by the BOD
contracts

Opinion that FS are Reports on the degree Recommendations

fairly presented of compliance about improvements

External Auditors Government Auditors Internal Auditors

 Assurance of
Responsibility
the Audit
for FS
Report

Management Auditor
 Limitations

1. Sampling Risk

2. Non-sampling Risk

3. Reliance on Management’s
Representation

4. Inherent limitation of accounting

and internal control system

5. Nature of Evidence
 General Principles

Code of Philippine
Professional
Professional Standards
Skepticism
Ethics on Auditing
 Theoretical Framework

What was held

true in the
Effective
Consistent past will
No long-term internal
Auditor should application of continue to
conflict control
Financial Data always GAAP/PFRS hold true in Audit benefits
between reduces the
are verifiable maintain results in fair the future in the public
auditor and possibility of
independence presentation the absence
the client error and
of FS of known
fraud
conditions to
the contrary
Thank
You